Miami Condo Investments – Income Generating Condo Investments

Introduction

In this article, we cover which condos are currently providing the highest returns, working examples of Miami Condo investments, rules of what to avoid and what to buy, and a wider look at the Miami micro and macro variables that are driving our investment market. Finally, we provide some solid reasons why the Miami condo market, in general, is a worthy consideration for your investment portfolio. As always, call me directly for one-on-one guidance on investment according to your budget, timeline, and expectations.

Historical performance of the Miami Condo investment market

Why work with us when buying a Miami Investment condos?

The Miami condo market is a good market to invest in if you follow a few basic ground rules. In short, this is how we effectively analyze Miami Condo Investments:

• We run our own data analysis.
• We have Condo Geeks software – looking at historical performance.
• We consider not just ROI but resale values.
• We study the human behavior.
• We look at the close relationship between supply and demand.
• We consider ‘running costs’ by looking at HOA fees, pending assessments, and annual condo meetings.
• We consider the ‘successful formula’ for the most popular and best appreciating Condos.

Miami Condo Investments to avoid?

• Generic product: In essence, the key is to concentrate on distinctive properties and condos that possess special qualities that set them apart. Think of prime locations, exceptional floor plans, or top-tier finishes. When considering individual units, it’s advisable to target specific types, like flow-through units, corner units, unique layouts, extra high ceilings, spacious terraces or breathtaking views. These types of units are typically designed for and cater to those who intend to use them as their primary residences. Exceptional, unique properties tend to appreciate over time because they’re challenging to replicate and, therefore, highly desired and in short supply. So, it’s crucial to realize that even within top-notch condo buildings, not all floor plans are created equal.
• Short-term rentals/Airbnb investments: Avoid investing in hotel condos, condos allowing short-term rentals, or Airbnb-focused projects. Reputable projects usually impose strict regulations on short-term rentals, often requiring minimum lease durations of six months or even a year. Firstly, the resale prices of Airbnb properties have declined due to market oversaturation. The ease of listing properties on Airbnb has led to a flooded market. Additionally, it’s crucial to understand that these types of condos typically do not appreciate in value. For instance, consider the Four Seasons in Brickell, which offers both condo residences and condo-hotel units. While traditional condos at the Four Seasons have seen a remarkable 200% value increase over recent years, condo hotel units only experienced a marginal 1% rise in value.
• Older Condos: Since the tragic event in Surfside, older condos are now being assessed every 25 years instead of the usual 40 years. We expect many of these older condos not to be able to get through these assessments without spending millions of dollars. Owners might not be able to cope with all the costs associated with such an assessment. Some of these older condos are very well managed and have sufficient funds but oftentimes owners need to pay out of pocket. In addition, insurance rates are increasing especially for older condos and therefore HOA fees will increase significantly.

Miami Investment Condos to Focus on

• Newer condos. Newer condos are much more desired than older condos, offer better amenities, are less likely to have large assessments coming up and will appreciate better. Although you can renovate older condos, there are architectural features that cannot be changed.
• Larger or 3 bedroom units. The demand for luxury properties is notably high. The luxury condo market is up 30% in the last 12 months as the supply for large residences has dried up. I have many clients looking for large (3,000 SF or more) units with at least 3 bedrooms. If you look in the resale markets, this is becoming increasingly challenging. The new condos are catering to the new luxury buyers, but that supply is coming in between 2024 and 2027.
• Primary buildings even if you are looking to rent the unit out. This means you look for condos where people live all year round. These tend to be stable condos, that are well managed and desired by renters.
• Consistent condos that have performed well over time. Look for the condos, that have performed consistently well and that have quality management. Every market has ups and downs but there are condos that (mostly the primary condos) that did better over time and are less vulnerable to economic change. Our Condo Geeks tool is excellent to track condo markets (locations) and specific buildings over time or to compare it to other condos in Miami?

Please always remember that it is a line by line conversation. Your unit is only as good as the floor plan you are buying. The condo might be doing well, but does the floor plan makes sense. Contact me to learn more about the best floor plans in the best condos.

3 Working Examples of Income Generating Properties

Is this Rental Market sustainable?

It has been reported in the media that Miami rental prices have decreased in recent months. Yes, the 2021/2022 storm is over and rental prices have corrected slightly. According to Professor Beracha of FIU, you need to consider where the prices are coming from. It is not fair to say prices decreased from $10K per month to $7.5K per month, cause they were coming from $6K before the pandemic. We need to understand that during the pandemic people overpaid just to get a unit. These days people are no longer overpaying. The market is still hot but prices are no longer panic prices. This does not mean the market was in a bubble and is now bursting. It purely means the panic to find a property is gone.

The demand for rental units is high. The new condos that are being constructed are mostly in the $2K per SF range, therefore it does not provide enough inventory for the general population. Miami is still receiving new companies and families on a daily basis. Companies start with moving their management levels and the rest follows shortly.

It is true however that some sellers are asking sky-high prices for a unit that is based on the hottest rental prices. When you are looking to invest in a property make sure the prices make sense. Sellers are oftentimes thinking of prices from a year ago with a promised ROI based on those achieved during the market peak. It is essential you buy a unique condo and pay the right price. Contact me today for more information.

 The 2023 average of $2,438 is based on a 891 sq. ft. apartment. The luxury markets in Miami are the ones that saw most increase, so the below 35% increase in rental rates are a modest representation of what is happening in the wider market. 67% Of the rental properties rent for more than $2,000 per month.

Miami’s Net migration is still among the highest in the country. While less reported on these days, families and businesses are still relocating.

According to Axios, Miami’s income levels are growing faster than the U.S. average, and salary growth is outpacing inflation The median income in the Miami-Fort Lauderdale-Pompano Beach metro increased from $69,522 to $70,769 after inflation was factored in That is an 1.8% increase over 3 years. More interesting is below overview as provided by Axios.

Where are the Rental Hotspots for Miami Condos?

Almost all true investment product can be found in Edgewater and Brickell, but please be aware of generic product in these markets. These markets are especially interesting if you are working with a budget of $2M or less. If you want luxury investment product please look at Ba Harbour, Surfside, Miami Beach or Coconut Grove. Coconut Grove is the most primary market of all of these markets.

Are Miami Condos a Good Investment? Conclusions by the Author

In conclusion, Miami attracts numerous relocating families and businesses, often bringing along their workforce. Notably, the city is experiencing a surge in the influx of young individuals, a pivotal factor in its ongoing economic transformation. This contributes to an escalating demand in a market where available inventory is limited. It is a simple matter of supply vs demand.

However, it’s important to recognize that not all condos make for sound investment opportunities. The guidance provided above regarding which Miami investment condos to target and which to avoid serves as an excellent starting point. As always, I encourage you to reach out for a more in-depth discussion tailored to your specific budget and objectives.

With over 15 years of experience as a real estate agent, I possess comprehensive knowledge of various condos in the area. I’m well-versed in identifying the most desirable floor plans that rent out quickly, and I can provide valuable insights into the current market trends. Please don’t hesitate to contact me, and together, we can navigate the Miami real estate landscape to meet your investment goals.

The different mechanisms to invest in Miami Real Estate

1.  Income-Generating Properties – Homes This article focuses on investing in single-family rental properties in Miami. We discuss which neighborhoods and property types currently offer the best rental returns. We offer real-life investment examples and provide guidelines on what to avoid and what to invest in. Furthermore, we analyze the various factors, both local and global, that influence the Miami real estate market.
2. Building a new home. In Miami, a notable trend is the high demand for new luxury homes. Custom, finely crafted properties command premium prices. We’ll cover how to locate suitable land, determine the construction cost, and manage the project timeline.

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